The International Monetary Fund has suggested that Afghanistan could adopt the dollar as an interim currency until a new Afghan currency can be introduced.

The proposal came during a visit to Afghanistan by a delegation from the IMF and the World Bank.

Trillions of afghani banknotes could be in circulation

Former Central Bank Governor Khalil Sediq

The delegation has been holding talks with Afghanistan's interim government about ways of revitalising the country's shattered economy.

A former governor of Afghanistan's Central Bank, Khalil Sediq, has welcomed the proposal, saying that it could help prevent disputes among various Afghan factions, many of whom have circulated their own version of the country's currency, the afghani.

Budget preparations

Afghanistan's interim government is currently struggling to reconstruct the country's economic system.

People would want dollars more than afghanis

One of its priorities will be to prepare a budget for the coming financial year, set to start on 21 March.

But planning is being complicated by the lack of fiscal accounting during the Taleban's rule and the fact that there are currently around seven versions of the afghani in circulation.

Khalil Sediq, the governor of Afghanistan's Central Bank before the mujaheddin took power in 1992, said:

"In Afghanistan, especially over the last 10 years, trillions of afghani banknotes has been issued. Each faction has issued them for themselves to support themselves financially and the foreign supporters of these groups have also provided them with huge amounts of afghanis.

"So now I can say that maybe trillions of afghani banknotes could be in circulation."

'Valuable stopgap'

Experts say that at this stage it would be extremely difficult for the interim government simply to withdraw existing afghanis and release new notes.

It could jeopardise peoples' savings and could also be opposed by some Afghan factions.

Khalil Sediq said that the dollar - already used for some transactions in Afghanistan along with the Pakistani rupee - could be a valuable stopgap.

Once people realised that the dollar was being used as an interim currency, he said, they would want to acquire it and the afghani would gradually disappear from circulation.

That would make it easier for the Central Bank to collect the old currency and issue a new one.

As for how long that might take, the IMF says it is likely to be at least two years before a new currency can be phased in.